Stablecoins are cryptographic tokens designed to maintain a stable value against an asset or a currency. The majority of them are pegged to fiat currencies, mostly USD or EUR. They gained popularity in 2018, as they offer a safe storage of value even when other cryptocurrencies are losing theirs or when they are going through a highly volatile period. Following, you will find a selection of top stablecoins as of May 2019.
Without a doubt, Tether (USDT) is the king of stablecoins. With a market capitalization of over $2.7 billion, Tether is currently the 8th biggest cryptocurrency by market cap. If we take a look at 24-hour volume, however, Tether overshadows all other stablecoins and even all other cryptocurrency, as it is the number two coin by daily trading volume behind Bitcoin. USDT is managed by Tether Ltd., which claims that they keep 1 USD in their reserves for every issued UDST (later changed to 1 USDT worth of assets). Tether was founded in January 2015 and was at first available exclusively on Bitfinex exchange, which has retained a key position in managing Tether.
DAI is a stablecoin issued by the MakerDAO project and it is arguably the most unique of all the stablecoins on the market in terms of its approach to ensuring price stability. While the majority of other stablecoins maintain their value by holding fiat currencies in their bank accounts, DAI relies on a special smart contract mechanism called Collateralized Debt Position (CDP) to ensure its price remains as fixed as possible. The smart contracts utilize Ethereum and everyone is invited to pledge Ethereum to the system, as more ETH results in an increase in coin’s stability.
TrueUSD is similar to Tether, as the company behind it keeps fiat reserves in a 1:1 ratio in USD based on the number of issued coins. The most significant difference is that the issuer of TrueUSD aims to provide a far greater level of transparency of their business operations and especially full disclosure of the amount of US dollars that they hold in their reserves. TrueUSD is under the supervision of third-party companies, which regularly publish monthly reports and account details.
USD Coin (USDC)
The USD Coin is another stablecoin project that provides a token pegged to the value of 1 USD. USDC is an ERC-20 standard token and was issued in September 2018 by the US-based CENTRE consortium and Circle. Just as TrueUSD, USD Coin also guarantees its fiat backing with monthly reports conducted by certified third parties.
Gemini Dollar (GUSD)
The Gemini Dollar or the GUSD token, also launched in September 2018, is yet another dollar-backed stablecoin but it holds a significant advantage over other stablecoins of this kind – it is issued by Gemini, one of the largest cryptocurrency exchanges in the world. GUSD currently has a rather low market capitalization and daily volume, but this is expected to change, as Gemini is an already established brand that can support GUSD with all of its infrastructure. Additionally, Gemini is trying to provide FDIC insurance of GUSD, which could result in Gemini Dollar take a much larger share of the stablecoin market in the future.